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[2009] WASC 190
Supreme Court of WA
2009-07-03
Kenneth Martin J, Beech J
Original judgment source is linked above.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION : PAROLA -v- PAROLA [2009] WASC 190
Real property - Caveats - Whether claims to caveatable interests have or may have substance - Whether serious question to be tried - Turns on own facts
Practice and procedure - Ex parte application - Whether orders should be discharged on grounds of material non-disclosure
Ex parte orders extending operation of caveats discharged
Bashford v Bashford [2008] WASC 138
Bell Group NV (in liq) v Aspinall (1998) 19 WAR 561
Brink's Mat Ltd v Elcombe [1988] 3 All ER 188
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471
Petelin v Cullen [1975] HCA 24; (1975) 132 CLR 355
Re Parliamentary Inspector of the Corruption and Crime Commission; Ex parte Corruption and Crime Commission [2008] WASC 305
BEECH J: (These reasons are an edited version of the reasons delivered extemporaneously on 26 June 2009).
1 The first named plaintiff, Mr William Parola, is the father of the first defendant, Ms Paula Parola. The second named plaintiff, Ms Janet Parola, is the wife of the first named plaintiff.
2 On 7 April 2009 the plaintiffs filed an ex parte application for orders extending the operation of two caveats lodged over property owned by the first defendant. On 9 April 2009 Kenneth Martin J heard the application ex parte. His Honour made the orders sought by the plaintiffs, namely that the operation of both caveats be extended until further order.
3 On 20 May 2009 the first defendant filed an application to vacate the orders of 9 April 2009. It is this application which is before me today.
4 I would discharge the orders extending the operation of the caveats for two reasons. First, I find that there is no serious question to be tried as to whether the plaintiffs have a caveatable interest. Secondly, I would in any event discharge the order by reason of the plaintiffs' material nondisclosure in their ex parte application filed on 7 April 2009.
5 I begin with the issue of whether the plaintiffs have demonstrated a serious question to be tried in relation to the caveatable interest claimed.
6 The legal principles relevant to caveats are outlined in my decision in Bashford v Bashford [2008] WASC 138 [42] - [56].
7 The plaintiffs claim that they have an interest in lot 257 Swarbrick Street, Walpole (the home property), as life tenants pursuant to an oral agreement said to have been made between the plaintiffs and the first defendant. Secondly, the plaintiffs claim that Mr Parola has a life interest in lot 4 Miguel Place, Walpole (the shed property), pursuant to an earlier oral agreement said to have been made between Mr Parola and the first defendant. According to the caveats, the plaintiffs base their claims on the doctrine of constructive trust and the doctrine of part performance.
8 The plaintiffs rely upon their affidavits sworn on 5 April 2009 in support of their application. I do not propose to summarise the contents of those affidavits. Paragraphs 12 - 37 of Mr Parola's affidavit sworn 5 April 2009 relate to the home property. It can, I think, fairly be said that the evidence contained in those paragraphs is in very general terms. It is often conclusionary and does not descend to the substance of what each party said. For example, there are references to 'the common understanding'.
9 Perhaps the high-water mark of the plaintiffs' evidence is to be found in pars 30 and in particular 33 of Mr Parola's affidavit. These paragraphs are in the following terms:
10 Ms Janet Parola's affidavit of 5 April 2009 is in somewhat similar terms. In my opinion, similar observations can be made as to its general and conclusionary nature. The most specific part of the evidence in Ms Janet Parola's affidavit is found in par 20, which is as follows:
11 The plaintiffs also sought to rely upon statements signed by other people, or appearing to have been signed by other people, which are annexures WCP1 - WCP3 to Mr Parola's affidavit of 5 April 2009. In my opinion, those documents are not admissible as evidence of the truth of their contents.
12 In the course of argument, counsel for the plaintiffs sought leave to put the contents of those statements into the form of affidavits to be sworn by those persons. I decline to grant any leave for the plaintiffs to file further evidence. In my opinion, the plaintiffs have had ample opportunity to put on further evidence, including since 20 May 2009 when they became aware of the first defendant's application for the discharge of the orders made on 9 April 2009. There is no evidence before me to support a conclusion that the plaintiffs could not have obtained affidavits from the persons who have apparently signed the annexures to Mr Parola's affidavit. Secondly, and in any event, the contents of those statements are such that they would not alter my decision on this application. That is so particularly in the light of the tenancy agreements signed by Mr Parola to which I will come.
13 In relation to the claim to the shed property, the plaintiffs rely upon pars 38 - 49 of Mr Parola's affidavit of 5 April 2009. Again, similar observations can be made as to the lack of specificity of what is there said and the conclusionary nature of that evidence.
14 The question on this application is not whether, viewed in isolation, this evidence would be sufficient to support the interests claimed. Rather, the question is whether this evidence, when viewed with the other undisputed facts in evidence, sustains the interests claimed.
15 The Wellstead property (26 Windsor Road, Wellstead), was purchased by Ms Janet Parola and the first defendant in 2002. Ms Janet Parola and the first defendant obtained a joint mortgage to finance this purchase. Subsequently, Ms Janet Parola was removed from the title of the Wellstead property and the first defendant refinanced the loan so that she was the sole borrower. The Wellstead property was thereafter sold in 2002.
16 The home property was purchased in early 2004 and the plaintiffs currently live in the residence on the home property. The shed property was purchased by the first defendant in November 2005.
17 The affidavit of the first defendant sworn 20 May 2009 annexes a number of tenancy agreements: one relating to the Wellstead property; two relating to the home property; and two relating to the shed property.
18 The tenancy agreement relating to the Wellstead property is annexure PMP8. It is dated 25 March 2002. Mr Parola deals with this agreement in pars 13 and 14 of his affidavit of 22 June 2009. Mr Parola does not deny that he signed this document but he says that he does not recall signing a tenancy agreement. I note the fax header printout that can be seen on the signing page of the agreement (page 39 of the affidavit of the first defendant sworn on 20 May 2009), which suggests that the document was sent from a facsimile in the name 'Bill and Jan Parola'; that is, the plaintiffs.
19 Accordingly, as counsel for the plaintiffs accepted, I can proceed on the basis that Mr Parola signed the tenancy agreement dated 25 March 2009 relating to the Wellstead property.
20 In her affidavit of 20 May 2009, the first defendant says that the parties agreed to a tenancy agreement dated 30 December 2004 in relation to the home property. Mr Parola says in his affidavit of 22 June 2009 that he does not recognise what purports to be his signature on that document, and he says that he believes he did not sign it.
21 It is not necessary to come to any conclusions on the question of whether Mr Parola did or did not sign the 30 December 2004 tenancy agreement. I note that Mr Parola says in his affidavit of 5 April 2009 that in the period following this document he applied for rent assistance. In any event, as I say, I do not find it necessary to resolve the question of whether Mr Parola signed the tenancy agreement for the home property.
22 The reason it is not necessary is that I find that on 1 July 2008 the parties signed what is annexure PMP18 to the first defendant's affidavit. That is a tenancy agreement relating to the home property, expressed to be for no fixed term commencing on 1 July 2008.
23 In par 44 of her affidavit, the first defendant says that on 1 July 2008 she entered into this tenancy agreement with Mr Parola. The first defendant says:
The reason I entered into this lease was to reflect the rent increase of $70 per week to $220. The First named Plaintiff advised me that the average rent in Walpole was between $200 and $250 per week. I agreed the First named Plaintiff would pay $250 per week but [he] changed it to $220 per week because he advised me he could not afford $250 per week. The First named Plaintiff has paid rent of $220 per week in accordance with this lease.
24 That evidence is not contradicted by Mr Parola in his affidavit of 22 June 2009. Mr Parola's affidavit of that date contains no evidence about this agreement, thus it provides no evidence of the circumstances in which this agreement was signed. On page 2 of the tenancy agreement, there is a handwritten alteration of the amount of the rent from $250 to $220, with the change initialled by Mr Parola. That is consistent with what is said in par 44 of the first defendant's affidavit.
25 Accordingly, the evidence of the first defendant is the only evidence before me as to the circumstances in which this agreement was made, and I accept that evidence.
26 I turn to the shed property. The first defendant's affidavit of 20 May 2009 annexes PMP34, a tenancy agreement of 30 December 2004. There is no signing page for that document in evidence before me. Because of the existence of the subsequent agreement of 30 March 2008, it is not necessary to say more about the agreement of 30 December 2004.
27 Annexure PMP35 to the first defendant's affidavit is a tenancy agreement in respect of the shed property, signed on 30 March 2008, and expressed to commence on 31 March 2008. It provides for a periodic tenancy that is of no fixed term with a weekly rent of $100.
28 The first defendant says in par 63 of her affidavit that on 31 March 2008 she said to Mr Parola that she was in financial difficulties and he needed to pay some rent to her. Mr Parola agreed to enter a lease agreement for $100 per week. That evidence is not specifically dealt with in the affidavit of Mr Parola sworn 22 June 2009.
29 Paragraph 8 of Mr Parola's affidavit of 22 June 2009 relates to this agreement. Mr Parola says that he recognises his signature on the agreement, but goes on to say:
However, I did not sign this lease on the understanding that it is a lease. I verily believe that I was misled as to the nature of this document because I have never agreed to this lease.
30 In my opinion, that evidence does not give rise to any serious question to be tried as to the enforceability of the July 2008 tenancy agreement relating to the shed property.
31 Counsel for the plaintiffs relied on the doctrine of non est factum. He referred to the decision of the High Court in Petelin v Cullen [1975] HCA 24; (1975) 132 CLR 355. The relevant passage in that case is as follows:
The class of persons who can avail themselves of the defence is limited. It is available to those who are unable to read owing to blindness or illiteracy and who must rely on others for advice as to what they are signing; is also available to those who through no fault of their own are unable to have any understanding of the purport of a particular document. To make out the defence a defendant must show that he signed the document in the belief that it was radically different from what it was in fact and that, at least as against innocent persons, his failure to read and understand it was not due to carelessness on his part (359 - 360).
32 There is no evidence that Mr Parola is a member of the class of persons who could avail themselves of the defence of non est factum. There is no evidence that he is a person who is in any way unable to understand documents. Further, there is no evidence as to what he believed the document to be and what he believed its nature was when he signed it. Moreover, there is no evidence as to how he came to have any particular belief as to the nature of the document. That being so, in my opinion there is no evidence that any misapprehension that he might have had in relation to the signing of the document was not due to his own carelessness.
33 Counsel for the plaintiffs submitted that the fact that the terms of the signed document are inconsistent with the earlier oral agreement supports a conclusion that Mr Parola must not have understood what he was doing and it follows that he is not bound by his signature. One of the several flaws in that submission is that in itself, not understanding a document one signs, perhaps because of not reading the document or perhaps for other reasons, is not a sufficient ground to find invalidity of that document.
34 The last sentence of par 8 of Mr Parola's affidavit sworn 22 June 2009 does not, in my opinion, give rise to any serious question to be tried on a claim of misrepresentation or misleading conduct.
35 In that sentence Mr Parola expresses a belief that he was misled as to the nature of the document. He does not give evidence of any facts to support that belief. There is no evidence that any particular person said anything about what the document was or what the document may have meant.
36 For those reasons I find that both the home and shed properties are subject to written tenancy agreements signed by Mr Parola. The terms of those tenancy agreements include a term that the tenancy is of no fixed duration, and also a term that the tenancy is terminable on notice by either of the parties. In the case of the landlord, the first defendant, the tenancy is terminable upon 60 days' notice.
37 Those written terms are directly inconsistent with the oral agreement said by the plaintiffs to have been made some years earlier. There is no evidence that anything was said at the time of, or prior to, the execution of the tenancy agreements which would support a conclusion that any earlier oral agreement for a life interest was objectively intended to endure beyond the written tenancy agreements and notwithstanding their contradictory terms.
38 I refer to the decision of the High Court in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471. In [32] - [36] their Honours explain the binding effect of the signing of a written agreement as follows.
It is, and always has been, common ground that each of the respondents executed a written loan agreement on 30 June 1989. The respondents alleged that the 'operative agreement' was not contained in that writing. It was said that the relevant agreement was reached earlier and was wholly oral. Yet it was not said that the written agreement should be rectified. It was not said that a defence of non est factum was available. It was not said that the written agreement was executed by mistake, or that its execution was procured by misrepresentation as to its contents or effect. (The misrepresentation alleged was as to what had been said in the conversations, not what the document was or provided.)
The respondents each having executed a loan agreement, each is bound by it. Having executed the document, and not having been induced to do so by fraud, mistake, or misrepresentation, the respondents cannot now be heard to say that they are not bound by the agreement recorded in it (22). The parol evidence rule (23), the limited operation of the defence of non est factum (24) and the development of the equitable remedy of rectification (25), all proceed from the premise that a party executing a written agreement is bound by it. Yet fundamental to the respondents' case that the operative agreements between the parties were wholly oral, and reached earlier than the execution of the written agreements, was the proposition that the written agreements subsequently executed not only may be ignored, they must be. That is not so. Having executed the agreement, each respondent is bound by it unless able to rely on a defence of non est factum, or able to have it rectified. The respondents attempted neither.
There are reasons why the law adopts this position. First, it accords with the 'general test of objectivity [that] is of pervasive influence in the law of contract' (26) The legal rights and obligations of the parties turn upon what their words and conduct would be reasonably understood to convey, not upon actual beliefs or intentions (27).
Secondly, in the nature of things, oral agreements will sometimes be disputable. Resolving such disputation is commonly difficult, time-consuming, expensive and problematic. Where parties enter into a written agreement, the Court will generally hold them to the obligations which they have assumed by that agreement. At least, it will do so unless relief is afforded by the operation of statute or some other legal or equitable principle applicable to the case. Different questions may arise where the execution of the written agreement is contested; but that is not the case here. In a time of growing international trade with parties in legal systems having the same or even stronger deference to the obligations of written agreements (and frequently communicating in different languages and from the standpoint of different cultures) this is not a time to ignore the rules of the common law upholding obligations undertaken in written agreements. It is a time to maintain those rules. They are not unbending. They allow for exceptions. But the exceptions must be proved according to established categories. The obligations of written agreements between parties cannot simply be ignored or brushed aside.
The conclusion that the respondents are bound by the written loan agreements may leave open the possibility that an earlier consensus reached by the parties was in each case a collateral agreement (made in consideration of the parties later executing the written agreement (28)), but that has never been the respondents' case. In another case it may leave open the possibility that the contract is partly oral and partly in writing (29). But that cannot be so here. The oral limited recourse terms alleged by the respondents contradict the terms of the written loan agreement. If there was an earlier, oral, consensus, it was discharged and the parties' agreement recorded in the writing they executed (30). It is the written loan agreement which governed the relationship between Rural Finance and each respondent.
In my opinion, analogous reasoning to that explained by the High Court applies in this case.
39 As I have said, there is no evidence that the signing of these tenancy agreements was induced by fraud, mistake or misrepresentation, or that the defence of non est factum is available. Consequently, Mr Parola is bound by the tenancy agreements. As in Equuscorp Pty Ltd, in this case the alleged earlier oral agreement contradicts the terms of the subsequent written agreement. Any earlier oral agreement was discharged and replaced by the agreement of the parties reflected in the document that they executed.
40 Counsel for the plaintiffs accepted, rightly, that any claim to the interests claimed in the caveats was necessarily founded on the alleged oral agreement. For the reasons I have given, I find that there is no serious question to be tried in relation to a claim that any oral agreement is presently enforceable notwithstanding the tenancy agreements signed on 30 March 2008 and 1 July 2008. For those reasons, I conclude that there is no serious question to be tried in relation to the interests claimed in the caveats.
41 I turn to the second ground for my decision to discharge the orders extending the operation of the caveats; that is, material nondisclosure on the part of the plaintiffs when seeking the orders on 9 April 2009.
42 The plaintiffs' counsel accepted, rightly in my opinion, that there had been material nondisclosure in this case. Counsel conceded that the plaintiffs should have disclosed at least the tenancy agreement of 1 July 2008 relating to the home property. Counsel for the plaintiffs suggested that that nondisclosure was mitigated by the reference in Mr Parola's affidavit of 5 April 2009 to the application for rent assistance. I do not accept that proposition.
43 The plaintiffs' case as presented on 9 April 2009 was such that the rent assistance did not alter the alleged character of the payments made to the first defendant as being contributions to the first defendant's mortgage. If anything, the reference in Mr Parola's affidavit to rent assistance should have put the plaintiffs and their counsel on inquiry as to whether there was a signed tenancy agreement.
44 I also find that there was material nondisclosure of at least the following further matters: first, the signed tenancy agreement relating to the Wellstead property; and secondly, the documents relating to the acquisition of and transfer in title of the Wellstead property. Both these categories of documents tended against the way that events were presented in the April 2009 affidavits of the plaintiffs and should, in my opinion, have been disclosed to the court.
45 The admitted existence of material nondisclosure gives rise to a discretion on my part whether or not to discharge the orders made on account of the nondisclosure. The discretion is broad. It is open to me to discharge the orders or to renew the orders notwithstanding the nondisclosure. The principles are outlined in Brink's Mat Ltd v Elcombe [1988] 3 All ER 188, 192 - 193, and in Bell Group NV (in liq) v Aspinall (1998) 19 WAR 561 as follows:
In relation to material non-disclosure, we think the principles are the same as those that apply to the grant of interim injunctions: as to which see Thomas A Edison Ltd v Bullock [1912] HCA 72; (1912) 15 CLR 679, 682. Where there has been a deliberate lack of candour relating to material of a major character there may be grounds for saying that a discharge of the order will follow almost as of course: see Bentley v Nelson [1963] WAR 89, 91. However, it is clear that the court retains a discretion even in the face of material non-disclosure: see Brink's Mat Ltd v Elcombe [1988] 1 WLR 1350, 1358; [1988] 3 All ER 188, 193-194, per Balcombe LJ; Westwind Air Charter Pty Ltd v Hawker De Havilland Ltd (1990) 3 WAR 71, 88. It is very difficult to give a general definition of the extent of the disclosure required because each case depends so much on its own facts. It is sufficient to say that the applicant must make a full and fair disclosure of all matters within its knowledge which are material to the proceedings and which tend in favour of the other party. There is a very helpful description of the broad principles in the judgment of Ralph Gibson LJ in Brink's Mat Ltd (1356-1357; 192-193).
According to Spry, Equitable Remedies (4th ed, 1990) pp 497-498), in deciding whether to continue or discharge an injunction in the face of material non-disclosure, the court takes into account a number of factors. They include the conduct of the plaintiff, the importance of the undisclosed facts, the prejudice that may be caused by granting or refusing relief and the public policy inherent in the rule requiring candour: see Brink's Mat Ltd; Fitzgerald v Williams [1996] QB 657. Given the public policy considerations which underpin the rule we can see no reason why these principles should not translate to the setting aside of ex parte orders generally (570).
46 As to the importance of the undisclosed facts, the plaintiffs submit that the undisclosed fact of the tenancy agreement of 1 July 2008 made no difference to the original decision on 9 April 2009. I am of a different opinion. For the reasons I have given, it seems to me that the tenancy agreement would have been of substantial, indeed crucial, significance in the determination of the extension of caveat application.
47 I turn to consider the conduct of the plaintiffs in the making of the ex parte application.
48 In my opinion, there was no justification for the plaintiffs' failure to give notice to the first defendant. There is a very important distinction between the need to bring a matter on urgently and therefore to give only short notice on the one hand, and a justification for no notice at all. The position was explained by Martin CJ in Re Parliamentary Inspector of the Corruption and Crime Commission; Ex parte Corruption and Crime Commission [2008] WASC 305 as follows.
These proceedings have been brought without notice to the Inspector. I have said on previous occasions, and repeat, that the jurisdiction of the court to proceed without notice is an exceptional and extraordinary jurisdiction. It is exceptional and extraordinary because it is a fundamental requirement of procedural fairness, and therefore of the processes of the court, that a person who is to be affected by an order of the court is given a reasonable opportunity to place submissions and evidence before the court in order to meet the case which is put against that person before any order is made.
There are occasions in which the interests of justice necessitate a departure from that fundamental principle of procedural fairness, but they are very rare and very exceptional. They will only occur where it is essential, in the interests of justice, to depart from those fundamental principles of procedural fairness, and then only to the extent that it is impossible to reconcile the requirements of procedural fairness with the interests of justice in the particular circumstances of the case.
There is an important distinction between urgency and lack of notice. On the evidence that I have seen, there is every reason for the Commission to have taken the view that it needed to invoke the jurisdiction of the court on an urgent basis. That is fundamentally different to asking the court to act without notice to a person whose rights and interests would be affected by the remedy sought. There is nothing in the materials that I have seen that would provide any basis for any apprehension that if the Inspector had been given notice of these proceedings he would have done anything other than act responsibly in accordance with his duties as an officer of the court, to assist the court in resolving the issues presented to it.
There is therefore no basis for any apprehension that the Inspector, for example, would have defeated the Commission's attempt to obtain interlocutory relief by publishing his report before the court could make a determination in respect of that application for relief. I can therefore see no justification whatever for having proceeded without notice to the Inspector in this case. I accept that any notice he would have been given would necessarily have been brief in duration. That arises from the urgency to which I have already referred, but that is a very different thing to asking the court to make orders that would affect the rights and responsibilities of the Inspector without hearing from him. That would be an extraordinary step for the court to take and it is certainly not a step which is justified in these proceedings [13] - [16].
49 The plaintiffs received a 21-day notice expiring on Tuesday 14 April 2009, that is the Tuesday after Easter. In the circumstances, the plaintiffs by their solicitors could and should have given notice or attempted to give notice by a letter sent sometime between 1 April 2009 and 3 April 2009. There is no evidence before me of any attempt to give notice to the first defendant.
50 The plaintiffs' counsel submitted from the bar table that he was primarily focused on preparing for what was an urgent hearing. In my opinion, that affords no excuse for ignoring the fundamental requirement to give notice to a party whose interests would be affected by the orders sought.
51 For those additional reasons, I would discharge and not renew the order on the ground of material nondisclosure by the plaintiffs.
52 For the reasons I have given I will discharge the orders made on 9 April 2009.
Bashford
Bashford
(1998) 19 WAR 561
(2004) 218 CLR 471
(1975) 132 CLR 355
(1912) 15 CLR 679
(1990) 3 WAR 71